Indian government sees less poor people by redefining poverty
Published on Fri, 2011-07-08 09:10
Source: The New Indian Express.
The new figures set by the Indian government to define poverty (an income of USD 0.45 a day for urban people and one of 0.33 for those living in rural areas) are “abysmally low”, wrote Himanshu Jha, the national coordinator of Social Watch India, in his most recent column for The New Indian Express, one of the major newspapers of his country. The politics fixed according to these indicators can exclude “a large section of the population” that needs aid from “the available social security net, which in this country is minimalist by any standard,” he warned.
Jha’s column reads as follows:
Redefining policy directions
By Himanshu Jha
India stands fourth in the list of countries ranked on the basis of number of billionaires. In 2011 we had 55 billionaires with a total world share of 4.5 per cent. A pretty straightforward record when we calculate the number of billionaires. Numbers become fuzzy when we start going about the business of calculating poor people. The Arjun Sengupta Committee pegged it at 77 per cent with that many people surviving on Rs 20 [USD 0.45] a day; the N C Saxena Committee pegged it at 50 per cent of the population living below the poverty line and then the Tendulkar report came up with a figure of 37 per cent (which was the most acceptable to the government).
The most recent calculation by the Planning Commission — fixing the baseline at Rs 20 a day for the urban poor and Rs15 [USD 0.33] a day for the rural poor — is a shocker. This was revealed during an ongoing case on public distribution in the Supreme Court. This is setting the bar real low. It would mean that anyone who is earning more than Rs 600 [USD 13.4] a month in urban areas and Rs 450 [USD 10] cannot be termed poor. This was calculated by the commission on the basis of the prevailing prices of 2004-05 but even at the current prices this cut-off is abysmally low. The new figures must set the alarm bells ringing; especially if we keep in mind the fact that the need to calculate the number of poor people and setting up of these minimum bars would translate into direct policy interventions in terms of providing the basic needs for the poor.
If the present formula is kept in place there is a possibility of a large section of the population being excluded from the available social security net, which in this country is minimalist by any standard. Here we are talking about the bare minimum, such as food, livelihood, health and accommodation or shelter. Going by the Planning Commission’s report Rs 578 [USD 12.9] is apparently enough for a city dweller with the following breakup — Rs 31 [USD 0.7] a month on rent and conveyance, Rs18 [USD 0.4] a month on education and Rs 25 [USD 0.56] a month on medicines and Rs 36.5 [USD 0.9] a month on vegetables. Anyone who is earning over and above this cannot be termed poor! This is three times lower than the $1.25 poverty the World Bank, at around 44 cents. India ranked at 67 out of 122 countries in the Global Hunger Index (GHI), 2010. To come up with such an erroneous poverty line, especially when hunger and food security are one of the biggest challenges, baffles all logic.
The provision of basic minimum has to be seen in the light of the existing challenges of food security in India. The figures are startling: 23.7 per cent of children in India are undernourished and more than 42 per cent are underweight. United Nations World Food program estimates that 27 per cent of the world’s undernourished population lives in India. To top all this is the unabated rise in prices, generally and specifically, of essential commodities. The prices of food items has seen a quantum leap, in the span of little over four years (2006-2011). The prices of food grains have increased 55 per cent, vegetables 60 per cent and other essential items 80 per cent. According to the National Sample Survey Organisation (NSSO), in 2004-5 more than 50 per cent of the rural household income and more than 40 per cent of the urban household income was spent on food items. This was in pre-price rise period. At present one can safely estimate that close to 80 per cent of the income in urban areas and perhaps more in the rural areas would be spent to buy the basic food items.
Critics called this ‘starvation line’ and the members of the National Advisory Council protested in no uncertain terms against this new poverty line by handing a symbolic Rs 20 ‘poor pack’ containing a spoon, 25 grams of daal, half slice of bread and a piece of torn kurta to the deputy chairperson of the commission, Montek Singh Ahluwalia.
However, there is a silver lining. The draft Food Security Bill prepared by the NAC has finally been taken forward amidst some differences over the Bill with the PMO and the Planning Commission. The Bill has proposed 46 per cent of the population as priority category (poor category) to receive subsidised food and a rise in the amount allocated to existing food subsidy among other things. Moreover, the Bill proposes to cover 90 per cent of the rural population and 50 per cent of the urban population till the implementation of its final phase. The Bill not only focuses on the drastic reform of the existing public distribution system but also focuses on the expansion of the Mid Day Meal Scheme and the Integrated Child Development Scheme. However, in what form and to what extent would the original recommendations be accepted by the Cabinet is yet to be seen.
The challenge for the government is to strike a judicious balance between a tight fiscal prudence and providing the committed food security. Estimates show that an additional Rs 10,000 billion would be needed to fulfil the objective of food for all. Apprehensions regarding this much-needed allocation putting fiscal pressure, one can clearly see the lack of political will in re-routing some of the available resources. Economists such as Praveen Jha and Nilachal Acharya have shown that the central government on an average doles out Rs 11,45 million crore per day to the corporates in form of tax sops (in 2008-09). Surely then, an additional Rs 10 billions to provide the basic minimum to the millions on the periphery would not be an impossible task given there is the right political will to back such an initiative.
It is perhaps time to revisit our policy options and formulate them in such a way that they not only provide for the basic minimum but also enhance the ‘capabilities’ of the citizens to go beyond the minimum standards of social security. At this juncture when India is projecting itself as a potential world power, it makes immense sense to take a step forward in defining and formulating our public policy not only in terms of ‘bottom line’ but to start thinking seriously about investing in the socio-economic well being of the people in order to include them in the mainstream. The bottom line approach of guiding our policies will have to be redefined; only then the commitment of inclusive growth will become a reality.